NORMA Group (ETR:NOEJ) Will Pay A Larger Dividend Than Last Year At €0.75

Published
March 26, 2022
XTRA:NOEJ
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The board of NORMA Group SE (ETR:NOEJ) has announced that it will be increasing its dividend on the 20th of May to €0.75. This will take the annual payment from 2.9% to 2.9% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for NORMA Group

NORMA Group's Payment Has Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, NORMA Group's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 33.6%. Assuming the dividend continues along recent trends, we think the payout ratio could be 29% by next year, which is in a pretty sustainable range.

historic-dividend
XTRA:NOEJ Historic Dividend March 26th 2022

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from €0.60 in 2012 to the most recent annual payment of €0.75. This works out to be a compound annual growth rate (CAGR) of approximately 2.3% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

Dividend Growth May Be Hard To Come By

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Over the past five years, it looks as though NORMA Group's EPS has declined at around 5.9% a year. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We don't think NORMA Group is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 3 warning signs for NORMA Group that investors should take into consideration. Is NORMA Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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About XTRA:NOEJ

NORMA Group

NORMA Group SE, together with its subsidiaries, manufactures and sells engineered joining technology solutions in Europe, the Middle East, Africa, the Americas, and the Asia-Pacific.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation5
Future Growth4
Past Performance1
Financial Health4
Dividends4

Read more about these checks in the individual report sections or in our analysis model.

Undervalued with reasonable growth potential and pays a dividend.